1. SUMMARY
The new Spanish Law 14/2013 of 27 September on support for
enterprising and internationalisation (the “Enterprising Law”)
contains a number of relevant tax measures:
- Value Added Tax (“VAT”): new optional cash-accounting
VAT regime for taxpayers whose VAT-turnover is lower than two million
euro.
- Corporate Income Tax (“CIT”):
-
Amendment of the rules governing the reduction of taxable income
deriving from specific intangibles, i.e., the “patent box”
regime.
- New optional scheme for the application of the deduction for
investments in research, development and technological innovation (“R+D+I”).
- New deduction for reinvestment of profits by small-sized companies.
- Personal Income Tax (“PIT”):
-
New incentives for investment in new companies and start-ups.
- New deduction for reinvestment of profits deriving from economic
activities.
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2. THE OPTIONAL cash-ACCOUNTING VAT Regime
This new special regime will be applicable from 1 January 2014 for
VAT taxpayers with a limited VAT-turnover that formally opt for its
application (the “VAT Cash-Accounting Taxpayers”).
The cash-accounting VAT regime will basically consist in (i) VAT
corresponding to transactions carried out by VAT Cash-Accounting
Taxpayers not being chargeable under the general rules (by which VAT
generally becomes chargeable when the relevant goods or services are
supplied), but when payment is made; and (ii) the right of deduction of
input VAT borne by VAT Cash-Accounting Taxpayers being postponed until
they pay their suppliers.
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2.1. Requirements for the application of the cash-accounting VAT
regime
The cash-accounting VAT regime will apply to those taxpayers which
(i) VAT-turnover during the previous calendar year did not exceed two
million euro (or which activity commenced during the current calendar
year) and (ii) which do not receive cash payments from the same client
in excess of EUR 100,000 during a given year; provided that they
formally opt to be subject to this special VAT regime under the terms
established in the corresponding regulations.
The option will be extended unless waived, in which case the taxpayer
may not re-apply for the regime for at least three years.
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2.2. Content of the special cash-accounting VAT regime
As indicated, the special cash-accounting VAT regime basically
entails the application of special rules to determine:
- when VAT corresponding to goods or services supplied by VAT Cash-Accounting
Taxpayers is chargeable; and
- when input VAT borne by VAT Cash-Accounting Taxpayers is tax
deductible.
It must be noted that the special rule regarding the moment when VAT
is chargeable affects both the VAT Cash-Accounting Taxpayer supplying
the relevant goods or services and the recipient (who may not deduct the
corresponding VAT until it becomes chargeable, disregarding whether the
recipient is a VAT Cash-Accounting Taxpayer or not); while the special
rule for the deductibility of input VAT borne by the VAT Cash-Accounting
Taxpayer only affects that taxpayer and not the taxpayer supplying the
relevant goods or services.
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2.2.1. Moment when VAT corresponding to goods and services supplied
by VAT Cash-Accounting Taxpayers is chargeable
Under this regime, the general rule is that VAT will be chargeable:
- at the time of full or partial payment of the price for the
amounts actually received; or,
- if "i" has not occurred yet, on 31 December of the year immediately following that
in which the transaction was carried out; or,
- if neither "i" nor "ii" have occurred yet, when the taxpayer is declared insolvent (“en
concurso”).
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2.2.2. Moment when input VAT borne by VAT Cash-Accounting Taxpayers
is deductible
Deduction of input VAT borne by VAT Cash-Accounting Taxpayers will be
possible upon payment of the consideration for the acquired goods or
services, according to the following rules:
- The right to deduct input VAT will arise at the time of full or
partial payment of the consideration (on the amount actually paid), or
if this has not occurred, on 31 December of the year immediately
following that in which the transaction was performed.
However, there are two special cases in which the right to deduct the
input VAT may apply prior to the two scenarios above:
- When the supplier of the relevant goods or services (not a VAT
Cash-Accounting Taxpayer) reduces the tax base as per the applicable
VAT rules on the grounds that the price is totally or partially
uncollectible.
- When the VAT Cash-Accounting Taxpayer is declared insolvent (“en
concurso”).
- The right to deduct input VAT may only be exercised by the VAT
Cash-Accounting Taxpayer in the VAT return corresponding to the VAT
period in which the right to the deduction arose, or in the following
four tax years (the right to deduct input VAT expires when this four-year
period has elapsed).
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2.3. Transactions excluded from the special cash-accounting VAT
regime
The cash-accounting VAT regime will not apply to:
- transactions carried out under the special VAT simplified regime,
or under the special VAT regimes applying to agriculture, livestock
and fisheries, sales equalisation (“recargo de equivalencia”),
investment gold, electronically-supplied services and the VAT grouping
regime;
- certain supplies of goods that are VAT-exempt: exports of goods
and transactions assimilated to exports, transactions in free trade
zones, free warehouses and other deposits, those relating to special
custom regimes and intra-Community supplies of goods;
- intra-Community acquisitions of goods;
- those in which the VAT taxpayer is the recipient of the
transaction (i.e., where the reverse-charge mechanism applies);
- imports and transactions assimilated to imports; and
- self-consumption of goods and services.
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2.4. Implications for the recipients of transactions carried
out by taxpayers implementing the special cash-accounting VAT regime
Any taxpayer (regardless its VAT-turnover amount) acquiring goods or
services from a VAT Cash-Accounting Taxpayer will be affected by this
regime since the right to deduct the corresponding input VAT will be
generally deferred to the moment of payment of the relevant
consideration.
In particular, the right to the deduction of input VAT will arise at
the time of full or partial payment of the consideration, or, if that
has not occurred, on 31 December of the year immediately following that
in which the transaction was carried out. However, if the provider is
declared insolvent (“en concurso”), the right to deduct input
VAT will arise at the time of such declaration.
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3. Measures regarding Corporate INCOME TAX
3.1. Amendment of the rules governing the reduction of income deriving
from certain intangible assets, i.e., the “patent box” regime
The “patent box” regime was introduced in Spain for tax
periods beginning on or after 1 January 2008, and consisted essentially
of the possibility of applying (in connection with CIT) a reduction of
50% on income deriving from licencing the use or exploitation of patents,
designs or models, plans, secret formulae or processes, or information
concerning industrial, commercial or scientific expertise, provided
inter alia that the relevant assets had been created by the
transferor under certain conditions.
The Enterprising Law introduces significant changes to the “patent
box” regime, which will apply to transactions on qualified
intangible assets carried out on or after 29 September 2013. These
changes essentially consist of:
- An increase in the percentage of the reduction, from 50 to 60%,
although this percentage is applied on the net income instead of the
gross income (which was the former criterion).
- The relaxation of the requirements for the tax-incentive: it is
now sufficient for the assignor (or transferor) to have participated
in the creation of the asset by contributing at least 25% of its cost.
- The removal of the quantitative limit of income that can be
reduced (formerly six times the cost of the asset).
- The extension of the scope of the reduction, which can now be
applied not only to income derived from licencing, but also from
transferring the ownership of the qualified intangible assets.
- The possibility of requesting from the tax authorities an advance
pricing agreement regarding the calculation of the income which may
benefit from the reduction. The advance pricing agreement may also
address whether or not the corresponding intangible assets qualify for
the purposes of the application of the reduction.
- Regarding transactions between entities taxed under the CIT group
regime, the 2008 regime special rule, under which income and expenses
arising from licencing on intangible assets were not excluded when
calculating
the taxable basis of the tax group, is eliminated. Also, the
Enterprising Law establishes that the intragroup transactions on
qualified intangible assets are subject to the general obligation to
document the pricing of related-parties transactions (while other
intragroup transactions are excluded from these obligations).
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3.2. New optional scheme for the application of the deduction for
investments in research, development and technological innovation (“R+D+I”)
For tax years beginning on or after 1 January 2013, CIT taxpayers who:
(i) are taxed at the general 30% CIT rate, at the 35% increased CIT rate,
or subject to the tax scale of small or medium size companies; and (ii)
qualify for the R+D+I deduction (under the requirements set forth in the
applicable regulations); may choose between the following two options as
regards the method for applying the relevant R+D+I deduction:
- The traditional scheme, which limits the application of all
deductions for investments (including the deduction for investments in
R+D+I) to 35% of the CIT liability, net of deductions to avoid double
taxation and certain tax allowances (the limit raises to 60% under
certain conditions).
- The new scheme established in the Enterprising Law, by which the
amount of the R+D+I deduction is reduced to 80% of its initial amount
and applied against the CIT liability without any limit, and where the
excess over the CIT liability, if any, is payable to the taxpayer by
the Treasury. The application of this new scheme is subject to certain
additional requirements and limits.
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3.3. New deduction for reinvestment of profits by small-sized
companies
The Enterprising Law sets forth a new tax incentive for the
reinvestment of profits by CIT taxpayers qualifying as small size
enterprises[1]
and microenterprises[2].
The incentive can be applied as regards profits generated in tax years
beginning on or after 1 January 2013 which are reinvested in new
tangible assets or real estate, under certain requirements.
In practice, this tax incentive will consist in the reinvested
profits being taxed at a reduced 15 or 20% rate (depending on the
applicable grade of the tax scale corresponding to the regime governing
small enterprises and microenterprises).
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4. AMENDMENTS TO Personal INCOME Tax
4.1. New incentives for investment in new companies and start-ups
The Enterprising Law replaces the former exemption of gains deriving
from the transfer of shares in newly-incorporated companies with a new
system of incentives for investment in new businesses, including, under
certain requirements:
- a deduction applicable against the national PIT liability for 20%
of the amounts temporarily invested in shares of new or recently created
companies; and
- an exemption of the capital gains realised on the transfer of
such shares which are reinvested in other shares that meet the same
requirements.
Both the deduction and the exemption will only apply to shares
acquired on or after 29 September 2013.
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4.2. New deduction for reinvestment of profits deriving from
economic activities
As of 1 January 2013, PIT taxpayers may apply a deduction for
reinvestment of profits when investing the net income of their economic
activities in new tangible assets or real estate to be operated in a
business, under requirements similar to those applicable to CIT
taxpayers.
[1] Companies with a
turnover lower than ten million euro, in the terms set out in article 108 of
the CIT Law and subject to the tax scale established in article 114 of
the CIT Law.
[2]
Companies with a turnover lower than five million euro, an average staff
of less than 25 employees and subject to the tax scale set forth by the 12th
additional provision of the CIT Law.
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1.
SUMMARY